Department store chain Kohl’s has reported that its net sales for the first half (H1) of fiscal year (FY) 2023 declined 4.1% year-over-year (YoY) to $7.0bn.

The company’s comparable sales for the period ending 29 July 2023 dropped by 4.7% from the same period last year.

Its gross margin as a percentage of net sales was 39.0% in H1 FY23, down by one basis point (bps) in the prior year’s period.

Kohl’s saw its operating income drop to $261m over the period from $348m in H1 FY22 while operating income as a percentage of revenue decreased by 96bps to 3.5%.

The retailer’s net income for H1 FY23 was $72m against $157m in the same period a year ago. Its diluted earnings per share (EPS) was $0.65 compared to $1.22 in the previous year.

In the second quarter of FY23, net sales of Kohl’s decreased by 4.8% YoY to $3.7bn and comparable sales dropped 5.0%.

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By GlobalData

The retailer’s operating income and net income for the quarter were $163m and $58m, respectively.

Its diluted EPS was $0.52 in Q2 FY3 against $1.11 in the prior year’s quarter.

Kohl’s chief executive officer Tom Kingsbury said: “Our second quarter earnings were in line with our expectations. We maintained strong sales momentum in Sephora at Kohl’s, reduced inventory by 14% and managed expenses tightly. Further, solid cash flow generation allowed us to reduce our borrowings in the period.

“Many of our strategic efforts are just underway, which we expect will contribute incrementally in the back half of the year and even more so in 2024 and beyond.”

Kingsbury added: “Looking ahead, we are reaffirming our 2023 guidance and remain confident in our longer-term opportunity. I want to thank the entire Kohl’s team for their efforts to support and drive improved Kohl’s performance.”

For the full year of 2023, Kohl’s expects net sales to decrease by 2% to 4% and an operating margin of 4.0%.

The retailer expects EPS in the range of $2.10 to $2.70.